A member of a limited liability company can be held personally liable for his negligent acts that were committed in furtherance of the company’s construction business. The LLC entered into a contract to build a small condominium project. The sole owners of the LLC were a husband (Mr. Allen) and his wife. Due to dozens of problems with the quality of the construction, the project came to a halt and the contractor “left the project”. The developer subsequently filed suit and was awarded judgment against the LLC and Mr. Allen personally, for negligence. On appeal, the court rejected Mr. Allen’s argument that under state law the LLC shielded him from personal liability for ordinary negligence he committed while working for the LLC. The court said the majority view of states that have examined similar LLC statutory language have concluded that a member is always liable for his own torts and cannot rely on the status as a member of an LLC as a shield. “In sum, we conclude that [the LLC] only protects non-tortfeasor members from vicarious liability and does not insulate the torfeasor himself from personal liability for his actions.” 16 Jade Street v. R. Design Construction, LLC, 2012 WL 1111466 (S.C. 2012).
About the author: Article written by J. Kent Holland, Jr., a construction lawyer located in Tysons Corner, Virginia, with a national practice (formerly with Wickwire Gavin, P.C. and now with Construction Risk Counsel, PLLC) representing design professionals, contractors and project owners. He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects. He is publisher of ConstructionRisk.com Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932. This article is published in ConstructionRisk.com Report, Vol. 14, No. 8 (Aug 2012).
Copyright 2012, ConstructionRisk.com, LLC
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